Quote from: Komodorpudel on July 05, 2013, 02:50:26 PM

Quote from: ehoffman on July 05, 2013, 12:40:48 PM

Well, this is all speculation Wink

But people are fearing that Gox doesn't have the liquidity to pay everybody. One theory I could have is that Gox played people's money.

Normally, in an exchange, people send their money and play their own money. BTC price may rise and fall, people individually gain and lose money, but in the end, no money is really gained or loss, it's only TRADED. One person will make money on the back of another less fortunate lad, or lose money to another person's gain.

So, as long as each individual account is kept separate, then whatever people bring in or out of the exchange, be it fiat or BTC, then the exchange is still viable, and can have all the fiat/BTC liquidity required.

However, under the cover, the fiat sent to the exchange is just put in a big melting pot. Some sort of money pool. And how much each person still hold in fiat (or BTC) is just data bytes stored on a computer. But this still works as good, and it's much simpler for the exchange operations.

So, as long as each individuals are treated independently, with their own assets isolated from other individuals, the game go on. If the prices rise and fall, and someone gain or lose money in the end, then it's only their gain/loss. The exchange is just providing exchange service, and the integrity stays on.

Now, let's speculate what would happen, if in a moment of great "illumination", Gox decided to invest in BTC, but didn't want to put it's own money in the pool. Instead, it would just go to his main Gox pool account (after all, a lot of people keep fiat in their accounts for different, and legitimate, reasons). Then, Gox actually play people's money. It ends up as if Gox would withdraw from the money pool, and re-insert it under it's name, to buy BTC. All this in hope that price will rise, and cash out (return what it took from the pool, and take out the profit). But what happen is that the pool is now short. What would happen if that the prices keep falling. People more and more want to cash out. The only problem is that the fiat pool is now drained.

The only options are:
- For Gox to insert fresh money in the poll (actually taking his loss at that time), but that most realistically won't happen (talking millions of $ here).
- Delay the cashout, in hope people reflow the fiat pool, so to pay out other investors wanting to cash out. And hope that enough transactions occurs in the meantime so Gox has some revenue from transactions to help cover this up. Well, seeing an increase in transaction fees would very highly back this theory up!

That scenario, although started faithfully, has now fully turned into a Ponzi-like scheme.

Note that this scenario is hypothetical and hopefully purely fiction. But I think there's still reasons for concerns...

Oh come on....it is possible but really really unrealistic.
They make their money as an exchange and with a long term perspective they could make way more money with an honest exchange than taking all money from the customers to buy coins.

Sadly this is exactly what people said about FullTiltPoker. They made a shit ton of money charging an absurd rake (we're talking millions monthly with barely any upkeep other than advertising so new money would flow in the poker economy). Why would anyone kill the chicken that lays golden eggs? Never under estimate people's greed. FTP ran away with people's money and devastated everyone in the process for a few extra million dollars.